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Introduction

India’s ethanol blending programme (EBP), initiated to reduce crude oil imports and curb emissions, aims to achieve 20% blending (E20) by 2025. Since 2014, EBP has helped India save over Rs 1.36 lakh crore in foreign exchange and replace nearly 193 lakh tonnes of crude oil, according to the Ministry of Petroleum and Natural Gas. While it promises annual savings in foreign exchange and supports domestic agriculture, the transition faces significant technical, economic, and policy challenges. 

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Key Challenges in Implementing Higher Ethanol Blends in India

• Food Security Risks: Ramping up ethanol feedstock production may divert agricultural land from food crops, especially if maize acreage expands significantly, potentially creating food–fuel conflicts.
• Uneven Benefit Distribution: The economic advantage of ethanol may bypass marginal farmers, traders, and non-sugar crop growers, leading to regional disparities.
• Dependence on Imports: Foreign exchange savings can be offset by the high import cost of fertilizers, other inputs needed for ethanol crops and more than 85% of crude oil imports, making India vulnerable to global supply shocks and dollar volatility.
  Eg: India’s fertilizer import bill alone stands at about $10 billion annually.
• Vehicle Compatibility & Efficiency Penalties: While BS 2 norms (post-2001) allow up to E15, older vehicles risk corrosion, material degradation, and reduced fuel efficiency.
• Lack of Consumer Choice: This one-size-fits-all approach forces consumers with incompatible vehicles to use ethanol blends, potentially damaging engines.
  Eg: In India, petrol pumps do not offer unblended petrol for older vehicle owners.
• Transparency Deficit from Automakers: Lack of disclosure on older vehicle ethanol compatibility limits consumer preparedness and risks unexpected repair costs.
• Environmental Trade-offs: Extensive sugarcane cultivation for ethanol strains water supply and generates vinasse, an ecologically hazardous byproduct.
  Eg: NITI Aayog reports sugarcane-based ethanol reduces GHGs by 65%, but concerns remain about soil and water impacts.

Measures to Ensure Smooth Transition Towards Sustainable Ethanol Use

• Safeguard Food Security: Prioritise use of non-food feedstocks (C-heavy molasses, agricultural waste) and ensure grain diversion does not exceed surplus levels.
  Eg: NITI roadmap aims to meet E20 with balanced use of sugarcane and grain-based ethanol to avoid shortages.
• Equitable Economic Gains: Introduce targeted incentives for smallholder farmers and promote ethanol feedstocks beyond sugarcane to balance regional benefits.
  Eg: ISMA supports EBP as a “national imperative” with economic and environmental benefits.
• Reduce Dependence on Imported Inputs: Boost indigenous production of farm inputs to ensure ethanol’s forex savings are not negated by other agricultural imports.
  Eg: Promote domestic fertilizer manufacturing using renewable ammonia.
• Offer Consumer Fuel Choice: Provide blended and unblended petrol options at pumps, especially in rural areas with older vehicle fleets.
  Eg: Brazil offers “flex-fuel” petrol pumps with varying ethanol ratios.
• Promote Sustainable Agriculture: Encourage efficient water use, crop rotation, and use of resilient feedstocks to balance environmental health.
• Enforce Price Transparency and Incentives: Maintain lower retail pricing for ethanol blends to promote uptake among consumers.
  Eg: The significant forex savings from ethanol blending (₹1.44 lakh crore) should reflect in pump prices.

Conclusion

India’s ethanol blending drive can reshape its energy landscape, cut $10 billion in oil imports, and aid climate action. But its success hinges on protecting food security, distributing gains fairly, ensuring vehicle readiness, preserving environmental resources, and maintaining consumer trust through transparency and pricing reforms.

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